Health Care Spending and Quality 8 Years into Global Payment

Tuesday, June 25, 2019: 2:30 PM
Madison B (Marriott Wardman Park Hotel)

Presenter: Zirui Song

Co-Authors: Yunan Ji; Dana Safran; Michael Chernew

Discussant: Andrew M. Ryan


Global payment models give providers a prospectively determined spending target or budget for the care of a defined population. Providers, often as accountable care organizations (ACOs), can earn shared savings and, in some models, assume shared risk. Bonuses are awarded for quality to mitigate potential incentives to underuse care. To date, long-run evidence on spending and quality under global payment is lacking. We evaluated 8 years of the Blue Cross Blue Shield of Massachusetts Alternative Quality Contract (AQC), a global payment model with two-sided risk.


Using 2006-2016 data, spending among enrollees whose physician organizations entered the AQC starting in 2009 was compared to that among privately-insured individuals in similar plans across control states (the 8 other New England states) through an intention-to-treat framework. We compared spending and utilization in the AQC to control using a difference-in-differences approach within an ordinary least squares regression model at the individual-year level. We decomposed changes in spending by site and type of care and by price versus utilization. We compared process and outcome quality to 2007-2016 New England and national averages. We evaluated whether savings on claims were larger or smaller than incentive payouts to providers. We examined changes in risk scores to look for potential changes in coding intensity, and we tested for differences in pre-intervention spending trends. Sensitivity analyses were performed.


After 8 years, average annual medical spending on claims in the 2009 AQC cohort increased by $500 per enrollee less than control (p<0.001), a 12.7% savings on claims. While medical claims savings were driven by lower prices in the first 3 years, after 8 years 56.5% of these savings were explained by lower utilization. We found no evidence of increased coding intensity. Process and outcome quality improved on most measures (such as diabetes care, cholesterol screening, and blood pressure and hemoglobin A1c control) relative to New England and national averages. Enrollees of organizations that entered the AQC in 2010, 2011, and 2012 had medical claims savings of 13.9% (p<0.001), 8.7% (p<0.001), and 3.8% (p=0.01) relative to control, respectively, by 2016. Pre-intervention trends in spending were not significantly different from control for all cohorts. Incentive payouts to providers, including shared savings and quality bonuses, exceeded medical claims savings in the first 3 years, but were exceeded by such savings in the last 5 years, producing net savings.


Medical spending on claims in the AQC grew slower relative to control over 8 years. In the early years, these relative savings on claims were largely achieved through referring patients to lower-priced providers or settings. In later years, it was increasingly achieved through lower utilization, including in imaging, laboratory tests, physician visits, and emergency department visits. While initial years produced reductions in claims spending without net savings, net savings emerged in later years, despite significant shared savings and quality bonuses paid to provider organizations. As ACO models mature, these findings suggest that a two-sided contract with meaningful quality incentives may offer a framework for sustained savings with improved quality for patients.